How do platforms deal with fake NFTs? Part 1: SuperRare
It’s clear that there are a lot of vulnerabilities, flaws and confusion around concepts of intellectual property, authenticity and security in the NFT industry. We think, in agreement with Jeff Gluck, that many of those flaws result from an impaired and fragmented approach to NFT minting and from the terms and conditions of the NFT’s sales platforms too.
Nothing is stopping one from minting a NFT purporting to sell an artwork depicting Mickey Mouse, Michael Jordan or the Supreme’s box logo, just like nothing is stopping one from selling unauthorized t-shirts of Mickey, MJ, or Supreme.
But if one sells enough counterfeit t-shirts, presumably Disney, Nike, or Supreme will step in and put an end to it. With the rise of virtual anonymity, can Disney or Air Jordan (Nike), or Supreme supervise the vast ocean of NFT marketplaces?
Upon creation, IP rights will subsist as they do ordinarily, depending on the jurisdiction. Furthermore, when the NFT is minted, the rights owner does not necessarily give away its IP rights with the NFT: the two exist separately unless they include assignment of use rights with the NFT. So the rights owner can be recognized from the blockchain register and credited with any royalties that may come from exploitation of the underlying asset. The main question revolves around the fact that the NFT and the asset are often separate things: the latter may still be accessible to the public and able to be copied easily, infringing IP rights when the copy is made. The creation of the NFT itself does not automatically protect the underlying asset in any way.
When it comes to buying some NFT on a digital marketplace, then, users cannot be 100% sure that the underlying asset (artwork mainly, or a branded digital item, just to make a few examples) is legitimate and the corresponding NFT has been minted by, or with the authorization, of its rights holder.
In order to avoid buying a “fake NFT” or at least in order to know if there are possible ways to deal with an unfortunate purchase, the first thing to do before clicking the “buy” button is to have a look at the Terms and Conditions of the platform you are dealing with.
To try to understand what the policies are related to IP protection adopted by the main platforms in the industry, we’ll have a look at their T&Cs, starting (in this first “episode”) with SuperRare.
SuperRare is a digital marketplace where the platform determines which NFTs are allowed to be minted, posted and sold directly on its marketplace. This marketplace, compared to an open one, is more exclusive, in fact, artists are required to apply for acceptance before they can mint or sell NFTs in order to keep low fraud risks and high quality standards. Approved artists on SuperRare are “whitelisted” and can mint SuperRare items using one or more of their smart contracts. To create a SuperRare item, approved artists must upload an original digital artwork, provide information about the artwork, authenticate the work, initiate a request to a token minting smart contract.
Their Terms and Conditions are specific in determining that artists can only mint works that they personally created and must refrain from minting works to which copyright ownership is unknown or disputed. SuperRare “Terms of Service expressly forbid artists from posting unauthorized, copied, or otherwise unoriginal content ” (see SuperRare Community Guidelines). Control, however, is apparently left on the same artists, who “should monitor their own art for infringing content before minting a token to ensure the integrity and authenticity of the Marketplace”. SuperRare states that “We have no power to prevent an infringing work from being minted, but we do have the power to take down infringing works or remove artists from our community for repeatedly posting infringing content”. In case of a claim of violation, SuperRare Labs actually doesn’t seem to take the responsibility of doing anything in particular, but it “will use reasonable efforts to investigate notices of alleged infringement and will take appropriate action under the Digital Millennium Copyright Act (DMCA) and these Terms, including removing or disabling access to content claimed to be infringing and\or terminating accounts and access to the site”.
